CAIRO: Egypt’s ruling military has agreed to lend $1 billion to the central bank as it struggles with plunging foreign reserves that threaten the country’s ability to import, a military official said on Friday.
"The armed forces have lent the central bank $1 billion from its projects," said Mahmoud Nasr, a member of the ruling Supreme Council of the Armed Forces (SCAF), in power since Hosni Mubarak was ousted in February.
Egypt’s military has huge economic power, owning businesses in numerous sectors and vast swathes of land across the country.
"The biggest danger to the Egyptian economy in the short term is the continued decrease in foreign reserves," he said in comments reported in the local media on Friday.
Foreign reserves "will go from the current $22 billion to $15 billion by the end of January. The amount is not enough to cover the country’s imports for more than three months," said Nasr, an aide to SCAF chief Field Marshal Hussein Tantawi.
Since the popular uprising that unseated Mubarak, reserves have already plunged from $36 billion to $22 billion as the vital tourism industry and other businesses suffer from instability and periodic violence.
Nasr said the budget deficit will reach 10.8 percent of gross domestic product this financial year, up from 8.1 percent last year.
Growth, which had hit levels of 5-7 percent in recent years, is expected to reach 2 percent, he said.
Last month, Standard and Poor’s ratings agency cut its long-term rating on Egypt by one notch to ‘B+’, days after deadly clashes between police and protesters demanding the ouster of the ruling military.
Earlier this week, Egyptians turned out to elect a new parliament in peaceful and orderly polls that were largely hailed as a success.
